FBI Agents’ ‘Wedding’ Is a Bust for Guests

After their wedding guests had streamed into Atlantic City, N.J., for the festivities Sunday aboard the yacht Royal Charm, the happy couple surprised them all -- by having them arrested as part of an alleged international Asia-based organized crime syndicate.

Unbeknown to the attendees, many of whom came from China for the occasion, the supposed bride and groom were FBI agents. The government said Monday that the pair had spent four years investigating a sophisticated racketeering enterprise suspected of smuggling into the United States vast quantities of black-market cigarettes, high-tech weapons, Ecstasy, counterfeit Viagra and virtually undetectable counterfeit $100 bills.

The operation had a large Southern California presence, authorities said, and much of the contraband was moved in shipping containers through the ports of Los Angeles and Long Beach.

The wedding, Justice Department officials said, was part of an elaborate trap designed to entice overseas-based alleged members of the crime syndicate into the U.S. so they could be arrested and charged. Several dozen of them were taken into custody while on the way to the dockside “wedding ceremony,” dressed in their wedding finest and apparently shocked at the turn of events, according to one Justice Department official.

“They were literally being taken out of their limos and into custody,” one Justice Department official said. “Some of them were bearing gifts -- expensive ones like Rolex watches.”

By Monday morning, at least 59 people had been arrested in Atlantic City, Los Angeles and nine other U.S. locations. Authorities were searching for at least 28 other people indicted by federal grand juries on both coasts.

Authorities would not disclose the identities of the two undercover agents who had pretended to be romantically involved. But they said the pair had spent years gaining the trust of dozens of alleged co-conspirators at the highest levels of the smuggling operation.

Their cover story worked so well, said Christopher Christie, U.S. attorney in Newark, N.J., that authorities decided to incorporate the two agents’ “relationship” into their plans to bring down the crime syndicate.

The Justice Department official said most of the alleged ringleaders had been taken into custody, including members of the Hsu family of China, who federal authorities contend in court documents organized and ran the global operation.

Officials said Monday’s arrests had decapitated one of the largest Asian criminal syndicates operating in the U.S. They described the operation as a significant blow against organized crime.

The Justice official and other U.S. authorities said they could not discuss many aspects of the case because it was ongoing and involved sensitive relationships with various overseas law enforcement agencies, including in China and Canada.

But authorities said they were startled at the syndicate’s brazen ambition and its level of sophistication, even in comparison with other Asian organized crime groups that have long operated in the United States.

Of particular concern, Secret Service officials said, was the group’s apparent ability to generate counterfeit U.S. currency that could fool even the most sophisticated detection devices. A government source said the bills, known as “super notes” because they were virtually identical to real currency, had been made in North Korea. The bills were seized before they entered the U.S. money supply, authorities said.

The group also used factories in China to churn out as many as 1 billion counterfeit cigarettes for sale in the U.S., some under the Marlboro and Newport brands. They also engaged in levels of money laundering and drugs and weapons trafficking that far outpaced the work of traditional Asian and European organized crime groups, top federal law enforcement officials said at a news conference at Justice Department headquarters.

There was no indication that the smuggling ring had terrorist ties, officials said. But Homeland Security officials are concerned that inbound shipping containers could hide explosives.

“This was a one-stop-shopping criminal organization that had the will and the means to smuggle virtually every form of contraband imaginable,” said John P. Clark, deputy assistant secretary for U.S. Immigration and Customs Enforcement at the Department of Homeland Security. “For those reasons alone, the organization posed a serious homeland security threat that we are happy to close down today.”

Deputy FBI Director John S. Pistole said the group was active in at least a dozen U.S. cities, in Canada and elsewhere overseas. “Asian criminal enterprises pose a unique and complex law enforcement threat due to the fluid nature of their enterprises,” Pistole said.

The arrests followed two parallel undercover law enforcement operations, dubbed Royal Charm in New Jersey and Smoking Dragon in Los Angeles. In the investigation, the FBI and Immigration and Customs Enforcement were joined by agents from the U.S. Secret Service; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Customs and Border Protection; the Postal Inspection Service; and the Department of Labor’s inspector general. Canadian authorities also participated, the U.S. officials said.

Pistole confirmed that some of those indicted and arrested in recent days were U.S. citizens. But he and other authorities declined to say how many of the suspects were Americans, or whether any played leading roles in an alleged conspiracy dating back at least five years.

The Justice Department unsealed 11 indictments in the case Monday. They describe in hundreds of pages of detail the allegations against the China-based syndicate, from the alleged leadership of the Hsu family to the international network of buyers, sellers and manufacturers of illegal goods.

The alleged smuggling ring reportedly operated extensively in Southern California, shipping much of its illegal cargo in containers of furniture. Once in the U.S., the goods were offloaded, transported to highly organized networks of associates throughout the U.S. and then sold on the street for profit, according to the indictments and interviews with federal officials.

Most of those arrested, including Cheng Ming “Bruce” Hsu and people identified as members of his extended family, face federal charges of racketeering, smuggling, counterfeiting and fraud that could bring them dozens of years in federal prison if they are convicted, authorities said.

Six of the indictments, including three racketeering indictments, were returned in New Jersey and charged 57 individuals with smuggling the counterfeit currency into the U.S. in containers with false bills of lading for toys, rattan furniture and other goods.

In October 2004, one container loaded with about $338,000 in counterfeit currency arrived in Newark; two months later, another contained nearly $3 million in counterfeit currency, the indictments allege. Undercover agents ordered a third shipment of nearly $2 million before the operation was shut down.

Syndicate members used the same strategy to smuggle $2 million in counterfeit cigarettes, 36,000 Ecstasy pills and more than a pound of methamphetamine into the U.S., the affidavits allege. The indictments also allege that two defendants, in conversations with undercover federal agents, entered into a $1-million deal to provide silenced pistols, rocket launchers, silenced submachine guns and other weapons to agents.

The U.S. attorney for Los Angeles, Debra Wong Yang, said Operation Smoking Dragon had resulted in four indictments and the seizure of nearly $1.2 million in counterfeit currency, $40 million in fake cigarettes, 9,100 Ecstasy pills, nearly 9 pounds of methamphetamine and large amounts of counterfeit Viagra and other pharmaceuticals.